STAND. COM. REP. NO. 218

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 876
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 876 entitled: 

     "A BILL FOR AN ACT RELATING TO RESIDENTIAL LEASE-TO-FEE
     CONVERSION,"

begs leave to report as follows:

     The purpose of this measure is to set forth an appraisal
method standard for determining the value of condominiums and
cooperative housing corporations in which a fee simple owner
offers a leased fee interest to be purchased by a lessee.

     Testimony in favor of this measure was received from the
Hawaii Association of Realtors and one individual.  Testimony
opposed to this measure was received from the Housing and
Community Development Corporation of Hawaii, Small Landowners
Association and Small Landowners of Oahu, and three individuals.

     Your Committee finds that appraisal of real property should
be based on its fair market value to ensure equity and fairness
in the process.

     Additionally, your Committee finds that a uniform appraisal
standard for condominiums and cooperative housing corporations
will avoid bias or impropriety by appraisers, reduce lengthy
litigation to determine land values, and expedite the transfer of
lease-to-fee conversions.


 
a                                                     SB876 SD1
 
                                   STAND. COM. REP. NO. 218
                                   Page 2


     In order to address the constitutional concerns expressed in
the testimony, your Committee amended this measure to apply only
to condominiums and cooperative housing corporations.   More
specifically, this measure was amended to apply only to
condominiums and cooperative housing corporations leases executed
on or after the effective date of this measure, and current
leases that do not have an appraisal method specified in the
lease.

     Additionally, your Committee amended this measure to allow
the fair market value conversion appraisal method to be used for
leases executed prior to this measure which provide for a
conversion appraisal method, if both the lessor and lessee are in
agreement that the appraisal method in this measure should be
used.  The amendment also exempts conversion through condemnation
proceedings from this measure.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 876, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 876, S.D. 1, and be referred to the Committee on Ways and
Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
a                                                     SB876 SD1